Earnings conservatism and audit committee financial expertise

Sultana, Nigar; Zahn, J-L. W. Mitchell Van der

doi:10.1111/acfi.12042

Cited by 59 publications

(50 citation statements)

References 44 publications

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“…Agency theory advocates argue that the presence of members with financial expertise enhances the audit committee's ability to ensure the external auditor's work is competently undertaken, comprehend audit judgements and understand and mediate during auditor/corporate management disagreements, thereby ultimately reducing audit report lag. Without financial expertise, the audit committee is heavily reliant upon the external auditor providing assurance that key financial accounting figures (e.g., earnings) are reliable and relevant to external decision makers (DeFond, Hann & Hu, 2005;Sultana & Van der Zahn, 2013). In supporting the presence of financial experts on the audit committee, resource dependency advocates argue such a presence enables the sub-committee to retain greater power over financial accounting information and audit judgements.…”

Section: Audit Committee Characteristics and Audit Report Lagmentioning

confidence: 99%

“…In supporting the presence of financial experts on the audit committee, resource dependency advocates argue such a presence enables the sub-committee to retain greater power over financial accounting information and audit judgements. Without financial expertise, the audit committee is heavily reliant upon the external auditor providing assurance that key financial accounting figures (e.g., earnings) are reliable and relevant to external decision makers (DeFond, Hann & Hu, 2005;Sultana & Van der Zahn, 2013). 1 The following hypothesis is proposed in examining the relationship between audit committee financial expertise and audit report lag:…”

Section: Audit Committee Characteristics and Audit Report Lagmentioning

confidence: 99%

“…The primary objective of SOX 2002 was to restore credibility to the US financial reporting system already tarnished by a number of well-publicised accounting scandals. As such, it is expected that, pursuant to SOX 2002 requirements, the presence of financial experts on an audit committee will increase its effectiveness leading to better quality financial reporting outcomes (Sultana & Van der Zahn, 2013), including timeliness of financial reporting. 2.…”

Section: Notesmentioning

confidence: 99%

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Audit Committee Characteristics and Audit Report Lag

2014

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This study seeks to determine whether audit committee compositional features are associated with the timeliness of financial reporting by Australian firms. Timeliness of financial reporting by firms, of which the length of an audit is a fundamental component, adds information content and impacts firm value, making an examination of audit report lag determinants important. Results indicate that audit committee members with financial expertise, prior audit committee experience and those who are independent are associated with shorter audit report lag. Results suggest that legislation mandating audit committee financial expertise and independence are effective also in improving the timeliness of financial reporting. More importantly, our results suggest that there may be benefits in constituting audit committees with other compositional features such as prior committee experience in overall efforts to improve the timeliness, and therefore quality, of financial reporting by firms.

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Section: Audit Committee Characteristics and Audit Report Lagmentioning

confidence: 99%

Section: Audit Committee Characteristics and Audit Report Lagmentioning

confidence: 99%

Section: Notesmentioning

confidence: 99%

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Audit Committee Characteristics and Audit Report Lag

2014

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“…Some prior literature does show board diversity (i.e., gender) has a negative impact on firm value (e.g., Palmberg, Eklund, & Wiberg, ). In addition, Sultana and Van der Zaha () report Australian firms with female directors practice less accounting conservatism. Other research, however, shows no association between board diversity (e.g., ethnicity) and firm value (e.g., Marimuthu & Koladaisamy, ; Marimuthu & Koladaisamy, ).…”

Section: Literature and Hypotheses Developmentmentioning

confidence: 99%

Corporate governance and accounting conservatism in Islamic banks

Almutairi

Quttainah

2019

Thunderbird Intl Bus Rev

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We examine whether Islamic banks are more likely to be conservative in their financial reporting than conventional banks, as well as how Islamic banks' unique corporate governance system affects accounting conservatism behaviors. Using a large sample of Islamic banks and their matched non‐Islamic banks; based on total assets and geographic location, in 15 countries, we find Islamic banks are more likely to deploy accounting conservatism as measured by loss avoidance, abnormal loan loss provisions, and C‐score, respectively. Islamic banks are about 95% more likely to be more conservative in accounting practices than their counterparts, depending on different model specifications. In addition, we report several board characteristics, such as size, independence, reputation, tenure, and diversity, are important determinants of accounting conservatism in Islamic banks. This relationship indicates certain board traits lead to greater monitoring roles, consequently reducing unethical behavior and increasing the degree of conservatism in accounting practices.

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“… To the authors’ best knowledge, this is the only study examining operating cash flow asymmetric timeliness in Australia. A few other studies (Balkrishna et al ., ; Lai and Taylor, ; Ahmed and Henry, ; Lai et al ., ; Sultana, ; Sultana and Mitchell Van der Zahn, ) examine Australian earnings asymmetric timeliness. For a comprehensive review of accounting research in the Asia Pacific region, see Benson et al .…”

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confidence: 99%

Operating cash flow asymmetric timeliness in Australia

Shan

Wright

et al. 2018

Accounting & Finance

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Operating cash flow (CFO) asymmetric timeliness occurs when CFO reflects bad news more quickly than good news. We examine the presence and determinants of CFO asymmetric timeliness in Australia, where substantial differences in reporting requirements of cash flow components, in characteristics of listed companies and in the degree of conservative financial reporting produce contrasting findings to those in the United States. We find supportive evidence for the novel 'sticky cost behaviour' explanation and also the productpricing strategy, but not the life cycle hypothesis. These findings are useful for investors and analysts concerned with forecasting the future values of companies.

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Earnings conservatism and audit committee financial expertise

Cited by 59 publications

References 44 publications

Audit Committee Characteristics and Audit Report Lag

Audit Committee Characteristics and Audit Report Lag

Corporate governance and accounting conservatism in Islamic banks

Operating cash flow asymmetric timeliness in Australia

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